Aviva Investors’ Return Enhancing and Liability Matching (REaLM®) portfolio of funds has reached its first anniversary, reporting a year of strong demand that saw inflows of £725million from UK pension schemes.
The portfolio can help pension funds tackle the under-funding issues by providing the potential of secure, long-term and inflation linked income streams. It consists of five specialist unregulated funds which seek a return of at least 1.5% p.a. (net of fees and expenses) above a benchmark of comparable duration index-linked gilts.
The five funds are:
• The Aviva Investors REaLM Social Housing Fund, which invests in residential property across the UK that is let on long term leases to Registered Providers and local authorities.
• The Aviva Investors REaLM Ground Rent Fund, which invests in residential and also potentially commercial ground rents.
• The Aviva Investors REaLM Infrastructure Fund, which invests across a variety of different niche infrastructure projects including solar pv investments.
• The Aviva Investors REaLM Commercial Assets Fund, which focuses on commercial properties let on long term index linked leases to strong covenants.
• The Aviva Investors REaLM Student Assets Fund, which invests in both residential accommodation and academic facilities let to the top UK universities.
Julian Taylor, Head of REaLM at Aviva Investors said:
“As an insurance owned asset manager, we were early to recognise the benefits of secure, long-term indexed cashflows and have been investing in such assets since the mid 1990s. We set up one of the first secure lease funds in 2004 and have a strong background in other areas most relevant to index linked investments such as infrastructure and student accommodation.
“Since launching our REaLM strategy we have received significant interest and investment from UK pension funds. The liability matching characteristics of the assets, combined with typically lower management fees than those of traditional real estate or infrastructure funds, creates an attractive investment opportunity. Rather than just individual products, our clients can select any combination of funds according to their scheme’s individual needs and investment goals. It’s an unrivalled proposition.”
The REaLM Multi-Sector Fund, scheduled to be launched in September 2012 with its first investors, allows institutional investors to invest in all five underlying funds.
The Aviva Investors REaLM team includes four dedicated portfolio managers, three assistant fund managers and one Client Portfolio Director. Julian Taylor, Head of REaLM Funds, has specific responsibility for the Commercial Assets and Student Assets Funds. Nigel Rule is the fund manager of the Social Housing Fund, Neil Gardiner is fund manager of the Ground Rent Fund and Ian Berry is fund manager of the Infrastructure Fund.
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